The Inventory Valuation Rule Is to Value Inventory at the Lower

question 8

Essay

The inventory valuation rule is to value inventory at the lower of cost and net realisable value on an item-by-item basis.
Explain the meaning of:
i.cost
ii.net realisable value
iii.the overall operation of the rule.

---

Definitions:

Winner's Curse

A phenomenon where the winning bidder in an auction pays more than what the item is actually worth, often due to imperfect information.

Bidder Valuation

The process by which a bidder determines the maximum amount they are willing to pay for a good or service in an auction.

Estimated Valuation

An approximate calculation or judgment of the monetary value of a company, asset, or product.

Common-value Auction

An auction type where the item for sale is of the same value to all bidders, but that value is uncertain.